CH. 14 Flashcards
Intoxicated, Efron enters a contract for the sale of his business, Freight Dispatch, to Gretel for less than its market value. This contract is enforceable if, at the time,
Efron understood the legal consequences.
All persons can make legally binding contracts in all situations.
False
A contract that calls for an action contrary to public policy is illegal but not unenforceable.
False
Deb is a minor. She can enter into any contract an adult can, provided
the contract is not one prohibited by law for minors.
Fagin and Gretel agree to hijack a truck carrying a load of almonds. If Fagin later refuses to go through with the crime, Gretel can
none of the choices.
The general rule is that no party to an illegal contract can sue for breach.
True
Dari, a minor, wants to disaffirm a contract that she entered into with Echo, a cell service company. The law in Dari’s state, as in all states, permits minors to disaffirm
executory and fully executed contracts.
Lazlo and Mac bet illegally on the outcome of a sporting event. Before the event is held, Lazlo changes his mind about the wager. Lazlo can
withdraw from the deal by giving notice.
Oscar owns Payroll Company, a bookkeeping service. Oscar pays Remy $5,000 to steal a list of a competitor’s clients. This deal is
void.
Reed agrees to sell his Sports Equipment store to Taylor. As part of the sale, Reed promises not to open a similar, competing store anywhere. This promise is most likely
invalid because of the unreasonable terms of area and time.
Game Corporation hires Hale, a minor, to create new customized game software for certain clients. Hale signs a contract that requires her to work for Game for eighteen months. Before beginning work, however, Hale tells Game that she will not create new software for Game and that she is going to work for Imagine Inc., a Game competitor. Is Game’s contract with Hale enforceable? Why or why not?
Since Hale is a minor, the contract with Game is unenforceable. She has the right to disaffirm the contract.
Contracts in restraint of trade always violate one or more federal or state statutes.
False
The lack of a license in certain occupations bars the enforcement of work-related contracts.
True
An unconscionable contract is one in which the terms of the agreement are oppressive, unscrupulous, or grossly unfair.
True
Seth is mentally incompetent but has not been adjudged by a court to be incompetent. Seth enters into a contract with Toby for the cleaning and maintenance of Seth’s warehouse. Most likely, the contract is
voidable if Seth did not comprehend the consequences.
Goods and services that are reasonably needed to maintain a minor’s standard of living, such as food, clothing, shelter, and medical services, are known as utilities.
False
Intoxicated, Obo enters a contract for the sale of his business, Precision Parts, to Quad for less than its market value. This contract is voidable if, at the time,
Quad fraudulently induced Obo to become intoxicated.
Von, a minor, wants to return a set of skis that he bought from Winter Sports. He used—and wrecked—the skis. In a state in which a duty of restitution is imposed, Von most likely
must return the skis and pay for the damage.
A contract to do something that is prohibited by statutory law is illegal but not void from the outset.
False
Foy, a minor, misrepresents his age when entering into a contract to buy a car from Gas Hogs Inc. Foy takes possession of the car, but makes no payments on the contract and tries to disaffirm it. Most likely, Gas Hogs can recover
the balance due on the contract.
A contract to do something that is prohibited by statutory law is void from the outset.
True
Among the requirements for a valid contract, courts generally presume the existence of
contractual capacity.
Quest enters into a contract to buy a thoroughbred from Rancho Mesa. Quest can disaffirm the contract
by words or conduct.
A contract provision that deprives one party of the benefits of the agreement may seem unfair but a court is not likely to consider it unconscionable.
False
Bianca, a minor, enters into a contract to buy two all-season passes from Chalet Ski Park. The contract will be made enforceable if Bianca
ratifies it.
To disaffirm a contract is to deny its existence.
False
At Mattress Store, Nate signs a contract to buy bedroom furniture. The contract sets a schedule of $500 monthly payments, subject to a late fee of 150 percent. Nate finds the language of the contract difficult to understand. This is most likely
procedural unconscionability.
All persons can make legally binding contracts in all situations.
False
A contract to do something that is prohibited by statutory law is void from the outset.
True
A contract that calls for an action contrary to public policy is illegal but not unenforceable.
False
A contract that calls for an action contrary to public policy is illegal but not unenforceable.
unenforceable.
A court usually will enforce a covenant not to compete provided its restrictions are reasonable.
True
Oscar owns Payroll Company, a bookkeeping service. Oscar pays Remy $5,000 to steal a list of a competitor’s clients. This deal is
void.
Opal is a minor. In at least some states, Opal can enter into a legally binding contract when she
all of the choices.
Von, a minor, wants to return a set of skis that he bought from Winter Sports. He used—and wrecked—the skis. In a state in which a duty of restitution is imposed, Von most likely
must return the skis and pay for the damage.
In determining procedural unconscionability, a court is most likely to consider whether
the buyer had an opportunity to ask questions about the contract.
Horse racing, video poker games, and charity-sponsored bingo are
forms of gambling allowed and regulated by many states.
Lazlo and Mac bet illegally on the outcome of a sporting event. Before the event is held, Lazlo changes his mind about the wager. Lazlo can
withdraw from the deal by giving notice.
The lack of a license in certain occupations bars the enforcement of work-related contracts.
True
Cass agrees to sell her Daily Donut shop to Ernie. In the agreement, there is a covenant not to compete that prohibits Cass from operating a donut shop within a certain distance. If the restriction is unreasonable, a court will most likely
reform the covenant.
If an illegal contract is executory, either party can enforce it.
False
A party may have the capacity to enter into a valid contract and the right to avoid liability under it.
True
The general rule is that no party to an illegal contract can sue for breach.
True
Fagin and Gretel agree to hijack a truck carrying a load of almonds. If Fagin later refuses to go through with the crime, Gretel can
none of the choices.
Twig is fifteen. In most states, for contractual purposes, Twig would be considered a minor until she is
eighteen.
Gretchen is adjudged by a court to be mentally incompetent. Gretchen
cannot form a legally binding contract with another party.
Evelyn is a minor. As a minor, she
all of the choices.
A party to a contract who has no reason to know that the contract is illegal can often obtain restitution on a partially executed contract.
True
Deb is a minor. She can enter into any contract an adult can, provided
the contract is not one prohibited by law for minors.
Contracts entered into by mentally incompetent persons are not valid under any circumstances.
False
